Personal Finance Final Exam

A credit card offer comes in the mail with the bold print "0% A.P.R. for New Accounts." Which important piece of information should you find before thinking about signing up?

• Can I get two or more cards with this offer?
• Can I pay my credit card bill online?
• What is the A.P.R. after the introductory period?
• What kind of designs can I get on my card?

Reading through a credit card disclosure (aka the Schumer Box), you see the A.P.R. for a specific card is set at 9.99% - 23.99%. Which of the following statements is probably TRUE?

• When given a range of A.P.R.s like this, you can assume most cardholders pay the lowest rate listed
• One of the primary factors determining your card's A.P.R. is your credit score
• With credit card A.P.R.s, cardholders like higher A.P.R.s because they earn more
• The A.P.R. on credit cards is usually fixed so they won't be adjusted as long as you are a cardholder

If you are trying to substantially reduce the amount you spend on food, you should try...

• Cooking your own food at home for as many meals as possible
• Dining at restaurants more often so you don't waste water doing dishes
• Eating way more snacks on the go and way fewer meals at home
• Drinking more coffee and soda so you are not as hungry for food

You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $800, car payment of $350, car insurance of $150, car maintenance of $50, entertainment of $500, food expense of $250, mobile phone of $75, student loan payment of $225 and other expense of $300. How would you describe your budget after analyzing all of your income and expenses?

• You have a surplus of $200
• You have a deficit of $200
• You have a deficit of $2,700
• You have a surplus of $5,200

Which of the following scenarios BEST demonstrates FOMO (Fear of Missing Out)?

• Megan takes a baking class after seeing a sign for the class at her favorite bakery
• David goes on a vacation to Europe and posts about it on social media every day
• Angela sees an advertisement for a pair of shoes and decides to buy them
• José wants to go see a movie that all of his friends have seen and are raving about

Research done on peoples' salaries and happiness levels has shown that...

• Most people are satisfied with their current annual salaries
• Increasing your annual salary is guaranteed to increase your long-term happiness
• Humans typically become accustomed to how much they earn and eventually want more
• Most people need to earn at least $200,000 a year in order to be happy

Which of the following best describes what a cognitive bias is?

• A rational decision that is based on research and facts
• The belief that a person should change their opinions when new facts arise
• the belief that we are right until someone provides information that contradicts our belief
• A strong, preconceived notion that people have that is based on incomplete information

Janet has a snowboard she doesn’t use anymore, but loss aversion has made her question whether or not she should sell it. Her friend Jack suggests she use the Overnight Test. Which of the following scenarios demonstrates the strategy she’s using?

• Imagine the snowboard was replaced with cash, then make a plan about how to spend the cash.
• Imagine the snowboard was replaced with cash, then figure out how to keep the cash and get her snowboard back.
• Imagine the snowboard was replaced with cash, then decide if she's happier with the cash or the snowboard.
• Imagine the snowboard was replaced with cash, then figure out how to use the cash to get her snowboard back.

Sebastian began day trading stocks at the beginning of the summer. After a month, he made a profit of $200. Due to his short term success and his belief that he is a highly skilled trader, Sebastian puts his entire savings into the market. This is an example of

• Overconfidence Bias
• The Fear of Missing Out (FOMO)
• Confirmation Bias
• The Endowment Effect

Imagine two scenarios: 1) You see a rare sports card being sold for $500 in a store but choose not to buy it because you think it’s too expensive. 2) You find a rare sports card worth $500 in your parents’ attic. Rather than sell it, you choose to put it in a case and display it in your room. In scenario 1, you are putting more value on your $500 than the card. In scenario 2, you are putting more value on your card than the $500. This is an example of what?

• Fear of missing out
• Overconfidence
• Endowment effect
• Confirmation bias